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tv   State of the Union  CNN  December 9, 2012 6:00am-7:00am PST

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>> they jumped out and pelted me with eggs. >> fresh eggs? >> rotten eggs. >> how do they keep a straight face? if you close your eyes, it sounds exactly like obama. you can always continue the conversation with me on twitter. "state of the union" is up next, enjoy the rest of your sunday. ♪ >> to recap the past weekend of activity atop the fiscal cliff, nothing happened. today, the search for a sweet stop when the deal the speaker can get to the president, and what he can sell to his bruised party. >> they put forward a unbalanced plan that lowers rates for the
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wealthie iesiest americans. >> the speaker's box. then, falling off the fiscal cliff, a tumble that would shake the world with international monetary fund chief kristine lagarde. >> the real threat at the moment is here with us. >> what happened if nothing happens with mark zandi, jackie calmes. >> politically, the speaker is playing with a weaker hand than the president. the pressure is higher on him, and his critics are louder, too. >> just need boehner to go along with raising the rates and that's it. republican party is finished. >> he is selling out our children right now with these massive tax increases, and that's his starting bid. he is saying here is $800 billion, now will you sit down
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with, us a obama? >> hashtags with names like fire boehner have become popular. still, where the votes get counting, boehner seems to have more room to maneuver than he did in preelection faceoffs. but it begs the question, even if the republican speaker gets a deal, can he get it passed? joining me now is tom cole of oklahoma, martha blackburn of tennessee, thank you both for joining us, and i think that's really the key question that we keep hearing. they'll get a deal -- they'll get something. but it doesn't matter if the two of them get a deal, it matters if the speaker has the house votes for it. tell me about the feeling in the caucus now for how free of a hand the speaker has. >> i think people are looking at how do we solve the system-wide problems. if you're going to talk
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revenues, you have to talk cuts, reform of your trust funds, medicare and social security -- >> you have 20 something days to do that. >> these are things that we have been talking about for years. the fiscal cliff is a name that the media came up with, but some of us have been saying for years, you have got to stop the out of control federal spending or you will end up at this point, we're there. >> i just want to the remind folks of something you said about the middle class tax cuts, i just want to the play that. >> in my view, we all agree that we're not going to raise taxes on people that make less than $250,000, we should just take them out of the discussion right now. >> he has his idea, i don't want to raise taxes on anybody. >> it seems to me now this is the split inside the republican caucus -- >> i don't think so.
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i think there's more discussion about tactics than it is any different. none of us want to raise the rates on anybody, but the rates on everybody go up at the end of the month. since we degree with the democrats on 98% of the american people, to me, i would just get that off the table now so they don't worry about it. i the those people are the president's leverage. it's the democrats going around screaming your taxes will go up if republicans don't agree, let's just make sure that we know we can continue to fight, the higher rates -- >> you lose your leverage a little bit. >> i think it's the quite opposite. we gain language. >> so you would go along with something like that? >> see, i have a different approach. the good thing is we are the party of big ideas. we're putting ideas out on the table, and saying this is how we solve this. let's talk about it. now, what i want to do is make certain that no one's taxes go
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up. let's look at cleaning up the tax code, and candy, the problem here is as one of my constituents said to me yesterday, it's 2% today, tomorrow it's 10%. and people know just like this, federal income tax that went on the books in 1913, it's coming to them real fast -- >> there are two realities here. one, the kalcalendar. people have been talking about it for decades, they're not going to get it done before the end of the year. number two, you all lost the election, so would you think that doesn't put some limitations on what you can ask for here? you lost members of the house, you lost members of the senate, and the white house. >> a couple points here, number one, the president thinks he has momentum, i think he is running on adrenaline from the campaign. second thing, we won the house. and the american people have put us there, you're right, we did.
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but the american people have clearly said we don't want our taxes to go up. what we need do -- the lincoln quote, you've got to deal with the issues of tomorrow by looking at it today. you cannot be practicing escapism welcome and not putting these issues on the table. it is an imperative. >> what is the art of the doable here for republicans? >> first, take the things you agree on and get them off of the table. >> in your caucus, do you have a lot of bergenning republicans? i think if it got to the floor, it would carry. >> that's my judgement, but i spend a lot of time counting votes. it doesn't say we're going to raise taxes, it says this group for sure, your taxes are not saying get that done with, moving on the, the speakers put
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out a proposal, it makes sense to me. at the end of the month, taxes go up for everybody. let's make sure where we can, we save as many of those tax cuts for as many people as possible. it's not waving a red flag to recognize political reality. >> if speaker boehner comes to you all with a package that promises entitlement reform, or puts us on a path to it, or whatever, it does the same thing it does to spending cuts, does he have support within the caucus for raising tax rates? >> well, remember, tax rates are going up anyway, we're not raising them. that's current law. i think what the speaker has supported -- and you should look at the proposal he put out. the most interesting thing to me was every single one of our major leaguers signed it, paul ryan, who has a role because of
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his vice presidential nomination -- >> $800 billion worth of revenue. >> yes, a speaker is very strong, got us through a tough election, maintained our majority. i think this is a speaker at the peak of his power. the president will have to deal with him, and it's not just about this period of time, it's about the next four years. the president will be president for four years, john boehner is like i to be speaker for four years. so this is the first part of a relationship that will stretch for years. they need each other to succeed. >> does the speaker have enough votes inside his caucus to agree to some kind of tax rate hike in the upper echelons of society? the high wage earners? does he have those votes that he can put together with whatever nancy pelosi can stir up and pass it? >> i'm not sure there is support for the rate hikes.
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there is support for revenue, by cleaning up the code. >> can you tell me what the difference is? isn't $800 billion in collected revenue still a tax hike? >> there are so many things, and this has been part of the debate for years. looking at cleaning up the code. and candy, getting in there, and there are so many ways you can do it. maybe you want to cap total deductions, maybe you want to look at some of these tax credits and clean this code up. dave camp put an incredibility amount of time into this. he and kevin brady have worked on this. it is the time -- this is the opportunity to clean that code up. >> if we don't act before the end of the year, taxes go up for everybody, not for 2%, and it's a lot more than $800 billion. and in this case --
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>> on the wealthy, they would run out. >> yes, some people think if we dig in and hold strong we can stop it, that's not the case. you have to do something, and doing something requires the cooperation of the senate, and the signature of the president. so we're not going to get 100% of what we want, but we can get a lot. john boehner is trying to focus this on where it belongs. this revenue won't come close to dealing with our fiscal problems. >> could you see your way clear of saying i get it, republicans are taking a bath on this politically, and you have seen the polling, republicans will be blamed if taxes go up on the middle class. do you think you can see your way clear at some point? it keeps those tax rates in tact for the middle class, and some childcare tax credits and other things in it? because it is the party of not
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allowing tax rates to go up. >> the problem with the rates going up, is there again b the more people know about this, they're saying, but look -- then you come back, and you're going to get the tax cuts that were there for me. what we want to do is make the cuts permanent, and spending temporary. and i, can quite frankly, like the fact that the american people are more engaged on this issue than they have ever been, and that are watching very closely. >> but the republicans -- >> the more people know about this, candy, the less they're against us. i talked with people at home all weekend. >> you're in a very specific part of tennessee as well. >> our constituents get that they're taxes are going up unless we act. they would like to be taken out of the line of fire, they expect us to continue to fight for everyone, but if i can protect 98% of them, and leaves me free to fight for the others, they
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would say take that deal, that's progress, working together a little bit. >> i have to run, but i need a yes or no from either one of you, will house speaker boehner still be speaker after the elections inside the caucus? >> absolutely. >> yes, he will be speaker. >> thank you, so much. we appreciate your time today, when we return, what happens to the global economy if the u.s. goes over the fiscal cliff? >> markets i think would react very quickly. four sixteen seventy six a month! okay, come with me -- we're gonna save you money. with straight talk at walmart, you get unlimited talk, text and data for only $45 a month per phone. would we get the same coverage? same coverage on america's best networks. you saved $146.76 by switching to straight talk. awesome! now you can afford to share your allowance with me. get the season's hottest smartphones like the samsung galaxy s2 and get straight talk with unlimited data for just $45 a month -- from america's gift headquarters. walmart. ♪
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with odor free aspercreme. powerful medicine relieves pain fast, with no odor. so all you notice is relief. aspercreme. the united states accounts for 20% of the economy. so u.s. leaders need to reach a deal and soon before that uncertainty damages the global economy. i spoke with her earlier. >> let me start out, because we have new unemployment figures this week, which shows that unemployment dropped to 7.7%, the lowest in four years, 176,000 new jobs created, translate that were fb more we from your perspective into what it means about the u.s. economy,
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describe the u.s. economy through those figures? >> the u.s. economy is creating jobs. right? which means it's doing a bit better, and some people decided they were going to open new positions, which is a sign of trust in the economy. in addition to that, you have a housing sector which has begun to pick up, at least it's bottoming out now, you have households that have reduced their debt, in general, so you have quite a few signs that the situation is beginning to improve, yet, not all numbers are good. if you look at the deficit, much higher in the u.s. than in the euro zone, for instance, debt, higher than many countries in the euro zone including spain, germany, france.
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yet, the united states of america is able to borrow at the lowest rate in pretty much it's recorded history. so you have a very, very diverse landscape at the moment, but certainly would that could be significantly improved, or worsened by the situation that we have concerning the fiscal cliff, the fiscal deficit, and the debt of the country, three topics that can be addressed now on a comprehensive and efficient fashion. >> so what should this mean? i think i could interpret any given number, to think oh, that means we should not touch taxes for any bracts, because it's as much money as we could have in it, or this means that we need more stimulus to keep the jobs going, or i could look at the debt and say this means we need
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to cut spending, so what does it mean? what would you, and what globally, what would mean the most for the u.s. to do? >> you know what you said? you would qualify as an economist. on the one hand, on the other hand -- the truth of the matter is that the best way out of this would be a balanced solution. you will always find a school of thought that will say it'sment better to cut spendings. another that will say it's better to increase the revenue and raise taxes. and another group that says we have to cut deficits now and in the long run. we have seen studies of all sorts, and they will not demonstrate the absolute truth. my view, personally, is the best way to go forward is to have a balanced approach that takes into account both increasing the
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revenue, which means raising tax or creating new sources of revenue, and cutting spendings as well. >> right now, it looks as though they will keep the tax rates for the middle class the same and pass that with maybe without any work on entitlements, and maybe with a promise to look for places to cut, is that enough to keep the world feeling secure about the u.s. economy? >> i don't think that it's enough. there is still that degree of uncertainty, that fuels doubt, that prevents investors, entrepreneurs, and house olds from making decisions, because they don't know what tomorrow will be. they know a fix has been found for today, but there is still work to be done. it would be much better to have a comprehensive approach. >> what is your level of
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confidence right now three weeks before something needs to be done? >> well, my confidence is deeply rooted in the affection that i have for the united states. it's history, it's characteristics, it's culture. i believe there is a sense of being practical, addressing the issues, rather than dancing around and avoiding issues that i have seen in this country and that is described by many observers, economists or writers, and i certainly hope that sense of pragmatism will prevail, and will bring people to look at a broader picture than, you know, what happens within the beltway if i may say. >> you also, i think at one point, predicted the u.s. growth rate of about 2.3% of next year, but that included keeping all of what we call the bush era tax cuts. what do you see for growth for
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the u.s. next year? >> our forecast has been revised down to 2.1%. >> it's positive. >> but if the u.s. economy was to suffer the downside risk of not reaching a comprehensive deal, then growth would be zero. >> a lot of time, our politicians they we don't know what will happen, this and that, and the energy needs, emerging democracies, industrialized nations, et cetera, what do you think is the biggest threat from the outside to the u.s. economy? >> the fiscal cliff. >> well, first of all, i think
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there are issues that are beginning to improve, and you know, whether you look at the euro zone, making progress, but certainly improving, and with good numbers, because if you look at the aggregate euro zone deficit or debt, those numbers are better. china's numbers have improved lately, and you have political stability back. so the volatility of the instability factors that are outside have reduced overtime. the real threat that we have is here, with us, and that can be addressed. >> but when you look at -- i understand that bangs being downsides our down afraided, you have more than 11% unemployment
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in the euro zone, which is a good deal higher than here, are those things threats to the u.s. economy, or do you think it is now destabilizing, or has the potential to destabilize the world economy? >> i think because it is relatively closed, it trades with itself and immediate neighbors, is less vulnerable to what happens outside, for instance in europe. but, the consequences would be relatively minor. it is more exposed to it's own difficulties, and it's own issues, than to what happens elsewhere in the world, because it is such a large player. >> so we're our own 5,000 pound gor ri gorilla. >> let me ask you as a final question, january 2nd arrives,
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no deal, what will we notice first? >> lack of citizen, markets would react very quickly, and it would react in the stock market really taking a hit. i would say it will depend on what's on the horizon. the debt ceiling, and the long-term deficit and debt levels, that would be different. >> so that plan, even if it's a little late, would, you think, be better -- >> better comprehensive fix. >> thank you for joining us. >> when we return, the perils of doing nothing. >> reports indicate that the president has adopted a
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deliberate strategy to slow walk our economy right to the edge of the fiscal cliff. >> this is the same republican leadership that had the house and senate in session barely a day. i gave birth to my daughter on may 18th, five days later, i had a massive heart attack. bayer aspirin was the first thing the emts gave me. now, i'm on a bayer aspirin regimen. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. [ woman ] learn from my story. look this isn't my first christmas. these deals all seem great at the time...
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a pretty overwhelming consensus shoulds that some way, some how, washington will avoid the fiscal cliff, and then there are those disconcerting moments. >> there's not going to be an agreement without rates going up. >> if there's no agreement, we go over the cliff. >> so just in case washington's consensus is wrong, and there's no deal, income tax rates will go up, a typical family of four will pay about $2,000 more a year, the social security tax rate jumps 2%, the average worker will pay $1,000 more annually. bents for the long-term unemployed will expire. most defense programs will be cut by about 10%. nondefense, discretionary spending, education, air travel safety, and food inspections would be cut about 8%.
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joining me around the table, dana bash, chief economist, mark zandi, and you have a new book out entitled "paying the price." steven moore, and jackie calmes. let's just ask you two, first, so set the stage. will it be armageddon? should we all start hoarding gold?
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you get such differing opinions about what would happen. >> well, january 1, no, no big deal. particularly if the treasury decides to freed holding schedules. but by the end of january, things start to get uncomfortable, by end of february, we have the debt ceiling, and that would be cataclysmic. >> this does seem to put a little more time on the plate of congress, which sends to expand the time you give -- >> look, i think you have very different ideological views. i think raising tax rates is harmful, could cause a recession. i think the spending cuts would be positive for the economy. the democrats believe the opposite of that. this is a dispute over very big ideas. this is not a small dispute, it's a dispute about the future
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of our federal budget and how we will operate in washington. >> as we said earlier, there is a consensus that they will get something, it's the congress, you know. is that consensus beginning to -- >> i think, you know, it depends on who i talk to, really. i think there is a movement towards tom cole, he said the republicans ought to think about declaring victory by going along with the president and senate democrats, taking the tax cuts they agree on for everybody above $250,000, and work on getting the tax rates back down again. why not make it clean instead of ugly if that's pry where they'll end up? >> many republicans are saying privately what tom cole said publicly on the show, they believe the politically
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expedient and right thing to do right now is just consult their losses, agree to the tax rates going up for the most wealthy, and try for significant tax reform so that 39.6% will be moot. however, there is a very, very real fear among house republicans about getting primary. there are some groups, club for growth and others, who will be absolutely after these republicans, saying you broke a pledge, you voted for a tax increase, and there are lots of republicans out there in various districts, waiting in the wings. >> here is the the point. i think solving the short-term tax issue is not that hard. i think what tom cole talked about, that will happen, the president will probably get his way, there is another half of this, which is what will we do about the spending side. as you know, all of those spending cuts are supposed to automatically take place on
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november 1st. i don't see the republicans walking away saying we won't do those cuts. i think there you will get more gridlock. >> let me read you something that emanuel cleaver said on friday morning, i think most rational people, including democrats, think we have to make cuts and deal with medicare, but let's have some means testing. >> governor romney agreed, and if you look at president obama's proposal for medicare cuts, there is means testing in that. i think we need both tax revenue, and we need much more than what tax reform will get us, we also need higher tax rates, and spending cuts. it has to be balanced. i'm optimistic, it feels to me like they're coming to a middle ground. >> i don't see that.
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right now when i listen to the democrats, i'm hearing no cuts in medicare, medicaid, social security, some are saying it's not even a problem -- >> they kind of don't matter at this point, right? >> they don't matter, but we talk so much about the politics within the republican party, and within the republican caucus of the house, and talk to seen your democrats and they will tell you, rank and file democrats, emanuel cleaver, who is the tom cole of the left, it will be hard for them at the end of the day to say you'll have to give on raising the eligibility age for medicare. that's not easy for democrats to swallow. >> the deals that were made, recently, have not been from the right and the left. the speaker lost his right, nancy pelosi lost her left, and they come together here. that's doable, yes? >> i think so. i think there has to be a lot of
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people, republicans, that wish they would have taken the deal seeing how the election came out that taking the deal in the summer of 2011 where president obama reluctantly indicated that he would be for changing the cost of living formula for social security, raising the retirement age very slowly for medicare, and because those things are going to be harder to get now for democrats, because the left has mobilized, liberal groups are very active. but i think the democrats recognize the entitlement spending has to be curved. >> they don't want to change it structurally. they don't want to block medicare, or voucherize medicare, or privatize social security. so if you those things, you v to
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make the armath work. >> let me tell you where the republicans are in their thinking. i think republicans are saying the president will probably get his way on his tax increases on the rich. let's say he gets that, that raises maybe $70 to $80 billion a year. then they say maybe we'll give the president that, go into 2013, and say what's your second act? we have not solved the problem. then to say you have to come forward with a budget, entitlement cuts, i think the president may have a short-term victory here, and going into 2013, he still has a big problem. >> it has to be all encompassing. it has to be revenue, spending, and it has to raise the debt ceiling. >> don't you need a deal, first, that promises a big deal. you can't get it by the 22nd of this month. >> no, but the framework for -- here are the numbers, here are
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the numbers that get you to fiscal sustainability. >> we may be here until december 31st, i hate to say it -- >> hang on just a second, we have to take a quick break, and more with our panel after the break, and later, explaining the fiscal cliff from tv's most famous billionaire. >> any of it as a car and the rich man as a driver, if you don't give the drive all the money, he drives you over the cliff.
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time for a check of the headlines. in the last unsettled house race, -- as we reported on last week's program, redistricting forced the run off race between the two republican lawmakers when neither received 50% of the vote in november. president obama taking his message of middle class tax cuts back on the road. he will visit a engine plant in detroit tomorrow. it will pull him into michigan's right to work legislation that limits union ability to organize
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workers. have you ever fallen asleep by watching tv only to be blasted away by a loud add? >> wow, that's a low price! >> starting thursday, the commercial advertisement loudness mitigation act goes into effect. the law which congress passed in 2010 bans adds from being louder than the tv program they're interrupting. we'll talk about that presidential trip to michigan, and what he'll say about the union showdown there. with the spark cash card from capital one,
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bp has paid overthe people of bp twenty-threeitment to the gulf. billion dollars to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else. we're working to fuel america for generations to come. our commitment has never been stronger. with odor free aspercreme. powerful medicine relieves pain fast, with no odor. so all you notice is relief. aspercreme. >> we're back with dawith our
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guests. right now, the legislature passes a right to work law in michigan. kind of, at least one of the cradles of union -- it would mean that you would not have to join a union. you would not have to pay union dues, how did this happen? >> it just came out of the blue and under the radar screen. republicans got their ducks together, they control the house, senate, and the governorship, even though it's a state that barack obama carried. they got this through in the house and senate, it's a big deal, a poiseen pill for the unions, they hate right to work. i think it's a smart move economically, a lot of new businesses, when looking at building new factories or plans, they will not even consider states that are right to work. so much of the growth in this country is in the right to work states. i think if it passes, and it will probably be tuesday or
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wednesday when we get a final vote on this, i think it puts michigan with a 10% or 11% unemployment rate, back on the map. >> and one of the highest union states in the country, did a lot to help reelect president obama, is steven correct that this actually, economically, makes sense, even if politically it seems kind of out of step? >> i go back and forth on this one. on the downside, it means slower wage growth than would have been the case. that's why businesses want this. i think steven is right. it will lead to more jobs. michigan is at a disadvantage against some of the right to work state s just south of it ad it's lost a lot of work to states like kentucky and indiana. again, it's going to weigh on wages. that's the bottom line here. >> the unions in michigan have given up quite a bit with the auto companies through the bailout period in 2009 and ford,
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so, you know, it's been very much a cooperative relationship between management and labor and the auto companies are neutral on this legislation. you remember the breaking point. it was the unions and the pensions. at the time, it was sort of not that long ago that the unions in michigan would bend on that and they did. >> michigan may be moving beyond being an auto state. >> it has to. >> right. they want to be a technology center, a financial center. and for those individuals, being right to work is an asset. >> it's important to point out that the unions have given up a lot. the cost has been lower. >> let me -- i want to move you to the jim demint departure. i know i'm taking you out of your comfort zone as little bit.
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everybody feel free to chime in. what caught my attention was a column today by ross in "the new york times" who wrote this chapter, the demint chan ter, the tea party chapter, call it what you will, is probably a necessary stage for the american right. it's normal for defeated parties and movements to turn inward for a period of ideological retrenchment before new thinking takes hold. now, the reason demint is leaving is because time is up for the tea party. >> i don't think so. he got a dozen tea party-backed republicans elected to the senate that would not have been there were it not for him. it's also true that he supported some candidates thatdy did not win. you can bet mitch mcconnell was not unhappy he left. he feels he's not a majority leader because of demint is there. there's a lot of "ding dong the
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which is gone" sentiment. >> a lot of republicans up to mitch mcconnell the senate republican leader who believed they would be in the majority today if not for some of the candidates. >> on the right there's a little too much demoralization. even's so depressed on the conservative side, very similar to wait was like in the 2004 election when george w. bush was elected. i always caution, you know, people are conservative like me, look, republicans can make a comeback. they can win in 2014, 16. you shouldn't abandon your basic principle ps. >> mark, you guest the last word, the final 15 seconds. tea party, less government interferen interference, are those sorts of ideas fading? >> no. i think that's part of the experience. we have this constant historical batter going all the way back to that point. how much government do we want or don't want and i think this is just part of that battle.
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i know on an only optimistic vote we always find a way to resolve this and come up with a right solution. >> thank you guys so much for joining me. congress is busy at work and just not on the fiscal cliff. if you are one of the millions of men who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. women and children should avoid contact with application sites.
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we got fascinated by words and defer nations this week. they released their list with the most looked up words of the year. hear the balloon drop, schaaring the top spot, socialism and capitalism. social yichl, editors wrote saw its largest lookup spikes during coverage of health care but also saw peaks in the days following both conventions and each of the presidential debates. capitalism, although looked up somewhat left often rode the same waves of interest. we're going to bit if there was a postal word of interest it wows be fiscal cliff as the contender. we know that because the most wonkiest budget cuts maneuvering has surfaced in pop culture. i think mr. burns. >> think of the rich car and the
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driver. if you don't giving the driver all of the money, he'll drive you over the cliff. it's common sense. >> in pop culture we exchange words for words that have comedic value. >> senate 23 7, app act to strike the world lunatic from federal law and for other purposes. >> we're unclear if what purposes the word lunatic would be struck nor are we certain how you go about the striking. you heard that right. lunatic to be removed from any law ever written. >> lieu tick hold as place in antiquity and should no longer have a prominent place in our u.s. code. >> they argue lunatic mean pejorative. >> on this vote the yeassy 212,